GBP/JPY stabilizes after BO-led volatile moves

After an initial bullish spike above 139.00 level, the GBP/JPY cross came under intense selling pressure and plunged to mid-point of 135.00 handle before stabilizing around 136.40-50 band. 

Friday's volatile move was triggered on disappointment from BOJ monetary policy decision. The central bank announced to expand its ETF purchases but left its rates unchanged at -0.1%, and also kept its monetary policy base unchanged at 80 trillion Yen.

The announcement disappointed the markets and forced traders to cover their bearish bets against the Japanese currency, which were built on expectations of aggressive monetary easing by the central bank after recent comments by Japan's PM Abe on introducing fresh stimulus measures. 

Going forward, the cross would continue to derive its move from news surrounding BOJ decision and sentiment around global equity markets that would get fresh impetus from US GDP data later during NA trading session.

From technical perspective, the pair is oscillating within a descending trend-channel formation on 4-hourly chart and is reversing from channel resistance. Moreover, the pair on Friday tested a fresh two-week low and hence, remains vulnerable to continue drifting lower.

Technical levels to watch

On a sustained weakness below 136.00 handle, the downslide could get extended towards trend-channel support near 134.30 region, below which the pair might continue to witness selling pressure in the near-term.

On the flip side, recovery momentum now seems to face immediate resistance near 136.80-137.00 area, which if cleared could boost the pair back towards the descending trend-channel resistance near 138.70 area.